Funds Pounding the Short Side of Corn and Bean Markets

July 25, 2013 01:11 AM
 

What Traders are Talking About:

Overnight highlights: As of 6:00 a.m. CT, corn futures are trading steady to fractionally lower, soybeans are 10 to 26 cents lower and wheat futures are 1 to 3 cents higher. Non-threatening weather and continued liquidation of long August soybean positions give bears the upper hand (strong upper hand in beans) for the daytime session. Cattle and hog futures are expected to open under light pressure this morning.

 

* Funds pounding the sell side. Funds continue to actively sell corn and soybeans amid what the non-threatening weather conditions. While the growing season got off to a very late start and there are big areas of prevent-plant acres in northern Iowa and southern Minnesota, along with plenty of holes in acres that did get planted in those states, funds (and other traders) are focused on the now generally favorable conditions. With crop concerns easing, funds have no fear of being active on the short side of the market. Since July 12 (the day after USDA's Supply & Demand Report), funds have sold a net 45,000 contracts (225 million bu.) of corn. During that same span, funds have sold a net 25,000 contracts (125 million bu.) Of soybeans.

The long and short Of it: It's either going to take a strong influx Of end-user buying or a weather/crop scare to stop the fund selling. If the 10-day weather forecast pans out, the next potential major weather scare would likely have to come from an early frost threat.

* Forecast stays non-threatening. The 10-day weather forecast continues to call for normal to below-normal temps and normal to above-normal precip across the Corn Belt. That tells traders there's nothing to fear from a weather standpoint. While the growing season got off to a slow and rough start, weather is deemed by traders to be near "ideal" now for building yields. As a result, crop concerns are declining by the day. But the reality is that there are trouble spots, especially in key areas Of the western Corn Belt, though it's going to be very hard to convince traders Of that given current benign weather conditions.

The long and short Of it: Unlike last year when traders could see the crop wilting amid the severe drought, this year's crop problems are being masked by favorable mid-summer weather. As a result, realization Of crop problems will come much later this year -- potentially not until combines roll if there isn't an early end to the growing season.

* Day 2 HRS tour results. Scouts on the second day Of the Wheat Quality Council HRS tour uncovered a crop that is behind in maturity due to late planting, but has good yield potential. The average yield on hard red spring wheat samples taken Wednesday along routes in northwestern, central and north-central North Dakota was 45.1 bu. per acre . That compares to last year's day 2 results Of 45.5 bu. per acre and the five-year average Of 42.6 bu. per acre on similar routes. Through the first two days Of the tour, the combined yield on hard red spring wheat samples have a calculated yield Of 44.1 bu. per acre, the exact same as the two-day average last year. Scouts will sample fields in north-central and northeast North Dakota and northwest and west-central Minnesota today. Final tour results will be released this afternoon.

The long and short Of it: After a rough start, this year's North Dakota crop is performing very well, but it still needs some time to finish. Barring poor late-season weather, this year's crop will be high-yielding.

 

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Comments

 
Spell Check

Anonymous
7/25/2013 01:48 PM
 

  This crop is "made" and was "made" back last december when we bought the seed. If you don't believe it, just ask any of the commodity index fund managers. They all went short and will drive this thing down come hell or high water, and some of us have had both. Back to the bad old days when the bears were in control from the time a futures contract came on line until it expired. Just go short and sit back and relax and watch the money roll in.

 
 
Anonymous
7/25/2013 01:48 PM
 

  This crop is "made" and was "made" back last december when we bought the seed. If you don't believe it, just ask any of the commodity index fund managers. They all went short and will drive this thing down come hell or high water, and some of us have had both. Back to the bad old days when the bears were in control from the time a futures contract came on line until it expired. Just go short and sit back and relax and watch the money roll in.

 
 

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